KOSDAQ-listed Shinhwa Pritech (formerly EM Korea) raised 20 billion won from financial investors (FIs), including new technology business financiers, after improving results through a business restructuring. It issued zero-coupon convertible bonds (CBs), and expectations are growing that the reshaping of its business portfolio around defense, aerospace, power generation, and auto parts will gain momentum.
On the 4th, Shinhwa Pritech(095190) said it will issue CBs totaling 20 billion won, including 13.8 billion won needed to develop and operate a military driveline project and 7.2 billion won to build heat-treatment facilities to expand its aviation business. The CBs will be acquired by a mezzanine fund with IBK Capital as the largest investor and an investment fund created by new technology business financier AP Investment Finance, for 15.5 billion won and 5.5 billion won, respectively.
The CBs will be issued at zero interest, and the conversion price was set at 1,869 won, reflecting the recent stock trend. If all CBs are converted into shares, new shares equivalent to 14.7% of the currently issued stock will be issued.
The market expects that Shinhwa Pritech, which improved results through business restructuring and attracted outside investment, will see its core businesses get on track.
Shinhwa Pritech boldly wound down its machine tool business last year. It had supplied parts to Hyundai WIA(011210) through its Haman establishment, but when Hyundai WIA sold its machine tool business, Shinhwa Pritech also halted the related operations. As of the end of 2024, the machine tool business accounted for 30% of revenue.
Although the business accounted for a sizable share of revenue, the company reshaped its portfolio to focus on defense and aerospace parts and on power generation (thermal and nuclear) parts. In defense and aerospace, Shinhwa Pritech supplies products to Hyundai WIA, Hanwha Aerospace, and Korea Aerospace Industries (KAI), and for power generation equipment it counts Doosan Enerbility(034020) and Korea Hydro & Nuclear Power Co. (KHNP) among its customers.
It also expanded into auto parts. After the largest shareholder changed to Shinhwa Jeonggong at the end of 2024, it appears to have strengthened business cooperation within the group. Shinhwa Pritech supplies core drivetrain parts to group company Shinhwa ENG. The company's largest shareholders are Shinhwa Jeonggong and Shinhwa ENG, and Shinhwa Group is a mid-sized group that supplies parts to Hyundai Motor Group.
After overhauling its business structure, the company's results improved significantly. Shinhwa Pritech had long posted losses but swung to a profit in the first half of this year and recorded net income.
An industry official said, "The company can invest the war chest it secured this time to strengthen its main businesses, expand production capacity, and improve profitability."
Meanwhile, Shinhwa Pritech is entangled in a labor dispute over the discontinuation of the machine tool business. After halting the business and firing nine employees who worked at the enterprise, the metalworkers' union launched a strike, arguing the dismissals were unfair. The company says the personnel adjustments were unavoidable due to the business restructuring.